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Commodity Morning View For 25 June 2014

Wednesday, June 25, 2014

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Bullions: -

Gold rose to a two-month peak on Tuesday as equity market, Iraqi insurgency, Weaker Dollar, and soft German business sentiment data and Softer US Data helped bullion build gains. There was a heavy slate of U.S. economic data released Tuesday, including the S&P/Case-Shiller home price index, the monthly house price index, new residential sales, the Richmond Fed business survey, and the consumer confidence index. However, these reports were not big markets-movers. The yellow metal climbed as investors switched out of equities after Germany's Ifo index of business sentiment fell more than expected in June. The German Ifo consumer sentiment survey came in weaker than expected. The Ifo reading was 109.7 in June versus 110.4 in May. A figure of 110.2 was expected. Worries about the Iraq and Ukraine crisis weighed on German consumer sentiment. The downbeat Ifo report adds more weight to the notions that the European Union’s economy remains in serious trouble. This is also an underlying supportive factor for the safe-haven gold market. August Comex gold was last up $1.20 at $1,319.60 an ounce. Spot gold was last quoted up $1.20 at $1,320.00. July Comex silver last traded up $0.135 at $21.15 an ounce.

Base Metals: -

London copper futures were flat on Tuesday after three days of gains, coming under pressure from renewed signs of economic weakness in Europe but offset by encouraging global growth prospects elsewhere. On Tuesday, the US Consumer Confidence Index rose to 85.2 in June, the highest since January 2008, and new home sales for May also hit a six-month high of 504,000, well above the 440,000 expected. Notably, the upbeat housing data were largely contributed by sharp increase in sales in northeast US. In the euro zone, however, Germany's Ifo index of business sentiment fell to its lowest this year, leaving trading subdued. Nickel fell to a one-week low in London as rising stockpiles signaled ample supplies. Inventories monitored by the London Metal Exchange rose 0.3 percent to 305,388 metric tons, within 0.2 percent of an all-time high reached last week. Three-month copper on the London Metal Exchange was to $6,885($3.12 a pound) a tonne by 0915 GMT from $6,885 at the close on Monday, its highest close in three weeks. On the Comex in New York, copper futures for delivery in September gained 0.1 percent to $3.145 a pound. Nickel for delivery in three months fell 1.6 percent to settle at $18,130 a ton at 5:50 p.m. on the LME, after reaching $18,096, the lowest since June 16.

Oil & Energy: -

West Texas Intermediate oil futures ticked higher on Tuesday, after the Wall Street Journal said the Obama administration has cleared the way for exports of a type of ultra-light U.S. oil called condensate. The U.S. Commerce Department has approved plans by two companies, Pioneer Natural Resources Co and Enterprise Product Partners LP, to export condensate in a private ruling, the Wall Street Journal reported on Tuesday. U.S. crude inventories rose by 4 million barrels to 382.6 million barrels in the week to June 20, while gasoline stocks also climbed data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a decrease in crude inventories of 1.6 million barrels, according to a Reuter’s poll. OPEC's commercial oil stocks stand at 57.5 days of forward demand, OPEC Secretary General Abdullah al-Badri said on Tuesday, adding there was no shortage of oil in market. Top oil exporter Saudi Arabia would increase crude oil production to meet demand if there are disruptions in oil supplies, a Saudi oil official said on Tuesday. Saudi Arabia, which currently produces around 9.7 million barrels per day (bpd), has the ability to pump to its full capacity of 12.5 million bpd, the official told Reuters. WTI for August delivery climbed as much as $1.47 to $107.50 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.95 at 10:02 a.m. Sydney time. Brent for August settlement slipped 42 cents, or 0.4 percent, to $114.04 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.29 to WTI from $8.43 yesterday.